Chicago is Downgraded by Moody’s Due to Pension Crisis

Moody’s Investors Service rating agency downgraded Chicago’s creditworthiness Tuesday, citing the city’s “massive and growing” pension hole.
After years of avoiding the issue, the city of Chicago is facing a massive spike in its annual bill for the pensions it promised current and retired workers. Next year, the city’s required contribution will more than double to $1.07 billion.

Moody’s said the pension crisis threatens “the city’s fiscal solvency,” without major tax hikes or budget cuts.
Chicago is home to one of the most troubled pension systems in the country. In total, the city’s four pension funds — for firefighters, police officers, and two for other city workers — face funding holes of nearly $20 billion.

Tuesday’s downgrades affect $8.3 billion in city debt, including $7.8 billion in general obligation bonds and $556 million in sales tax bonds. It follows previous downgrades by Moody’s and other ratings agencies.

via CNN

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza